Global population growth adding 1 billion more people to feed to this earth in the next decade, dietary changes will mandate a 70+% increase in protein output (Source: FAO 2016), more homes as people migrate from an agrarian society to urban dwellers, infrastructure needing to be constructed/upgraded and more waste being created: the need for investment in resource stability is expanding on a daily basis and this is why financial advisors can no longer afford to ignore Real Assets.

Advisors have often been concerned about the performance of Real Assets in a low inflation, low commodity price environment. Short term performance of Real Assets can be depressed in such an environment, but in 2016 the bigger picture has come to the forefront with investors focusing on how to profit from global population growth trends and natural resource consumption in the long-term.

Real Assets are alternative asset classes that often include investments in infrastructure and real estate, and can also include commodities and related investments such as timber, agriculture, precious metals, and natural resources.

Interest has been increasing among investors, in recent years, to expand from the traditional asset classes to construct a more diverse portfolio. Real Assets provide a broader diversification beyond traditional equity and fixed income allocations with historically low correlation to stocks and bonds.

Gold, for instance, has a long history of being an uncorrelated asset and its benefit as a portfolio diversifier is highlighted in today’s low interest rate environment. As more central banks begin to adopt negative interest rate policies, gold becomes more attractive as the ultimate store of value. In a world where macro driven systemic risk remains elevated, the need and the value of an uncorrelated asset becomes even greater.

In addition to the diversification benefits, Real Assets also offer inflation protection to a portfolio where increasing geopolitical risks create greater volatility in commodities markets. Allocating to Real Assets can hedge the inflation risk with exposure to companies whose revenues increase when underlying commodity prices rise.

In particular, commodity influenced equities have been strong performers in the current marketplace YTD 2016, reversion to the mean is just beginning.

Recent company balance sheet restructuring through non-core asset sales and reductions in capital expenditures, coupled with the recent rally, have provided companies with stronger commodity pricing, greater cash flows and further strengthened their balance sheets.However, there is one area that may be being overlooked by many investors.

Timber has grown steadily as an asset class; the value of assets under management by timberland investment management organizations has doubled in the past 10 years. However, the asset class remains relatively small, and increased demand from institutional investors has increased valuations.

In today’s environment, we are still facing an upward sloping yield curve. An upward sloping yield curve implies a few things for timber products. The divergence from short-term to long-term rates implies greater future growth from a macro level. Traditionally, a steep yield curve has been associated with an uptick in wood products, as this encourages mortgage lending and home construction.

Overall, Real Assets appear to be an excellent complement to a core portfolio because they tend to offer sustainable yield, inflation protection, and tremendous, uncorrelated diversification to a traditional stock and bond portfolio.

Michael Underhill is portfolio manager of the RidgeWorth Capital Innovations Global Resources and Infrastructure Fund INNNX.